Asset Turnover Ratio Calculator

Enter the total sales revenue (net sales) and the total assets into the calculator. The calculator will evaluate and display the asset turnover ratio.

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Asset Turnover Ratio Formula

The following equation can be used to calculate an asset turnover ratio.

AT = NS/ TA

• Where AT is the asset turnover ratio
• NS is net sales (revenue) for the period ($)
• TA is total assets (often average total assets for the same period) ($)

To calculate the asset turnover ratio, divide net sales (revenue) by total assets (commonly average total assets for the period).

Asset Turnover Ratio Definition

Asset turnover ratio is a financial term used to describe the ratio of net sales to total assets. This ratio measures how efficiently a company generates sales from its assets.

What is a good asset turnover ratio?

A good asset turnover ratio depends on the type of business and the industry. In general, a higher asset turnover ratio indicates the company generates more sales per dollar of assets, but it should be compared with similar companies and considered alongside profit margins. Capital-intensive industries (such as utilities or heavy manufacturing) often have lower ratios, while high-volume or lower-asset businesses (such as many retailers and some service businesses) often have ratios above 1. A ratio above 1 means annual net sales exceed the asset base; it does not, by itself, indicate profitability or how quickly an asset “pays for itself.”

How to improve an asset turnover ratio?

The most common way to improve an asset turnover ratio is to increase the net sales generated from the existing asset base. For example, if you have a machine that produces goods but is running at 50% capacity due to needed maintenance, maintaining the machine and keeping it in good condition can increase production and sales without increasing assets. Another way to improve the ratio is to reduce underutilized assets (for example, by selling idle equipment or improving inventory management) while maintaining sales.

Is asset turnover ratio a percentage?

An asset turnover ratio is a ratio of two dollar values, so it is unitless (often expressed as “times”), not a percentage. With that said, it can be converted to a percentage by multiplying by 100. Using the formula above: (NS/TA) × 100%.

Asset Turnover Ratio Example

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